Chapter 15
Crash and Depression
American economy in the 1920s
• It appeared to be healthy
• Stock prices rose and stocks were being sold at an
alarming rate
• Toward the last half of the decade the stock situation
was unsound
Signs of an unsound economy in
the 1920s
• Uneven prosperity-rich get richer, poor get poorer
• Growing person debt-people purchasing things on credit
that they could not afford
• Over-production-agriculture and industry continuing to
produce more than they could sell
• Stock market speculation-buying stocks on margin and
gambling that the price would go up
Not all Americans experienced prosperity in the 1920s.
Farmers suffered the most during the 1920s.
-European countries no longer needed American farm products at the
end of WWI, but American farmers continued to produce the same
amount of crops
-prices of those farm products fell; therefore, farmers incomes fell
-farmers became very poor
Arkansas sharecroppers
On October 29, 1929, the stock market
crashed. This date is known as Black
Tuesday.
• On this day, many investors panicked and
rushed to sell their stocks at the same time.
• This cause a series of events where more and
more people rushed to sell their stocks.
• At the end of the business day, a record 16.4
million shares of stock had been traded.
• By the end of November, 1929, the stock market
had lost $100 billion dollars in stock value (40%
of its value).
When the Dow Jones Industrial average dropped in October 1929,
investors rushed to sell their stocks and get out of the market.
Millions of Americans who had never owned
stocks were affected by the crash as
businesses closed and they were left
jobless.
Many banks close after the stock market crash.
• Banks had invested people’s money in the stock
market.
• When the market crashed, the banks could not
return depositors’ money.
Hoover, who was President at the time of the stock
market crash, believed in voluntary controls in the
business sector.
• Hoover asked businesses not to cut
wages.
• Hoover asked businesses not to lay off
workers
• Businesses could not afford to meet his
requests, because consumers were no
longer able to afford to buy their products.
The voluntary approach did not work. Wages
continued to decline and unemployment
continued to rise. As a result, people lost their
homes and farms to foreclosures.
Hoovervilles sprang up as a result. Hoovervilles
were shanty town slums that were built on the
outskirts of cities.
Making matters even worse, international
trade slowed in the 1930s due to the
Hawley-Smoot tariff.
• The highest import tax in history, passed in
1930.
• European countries passed their own
tariffs as a result
• Trade slowed and more businesses failed
When the voluntary approach to solving the
problems of the Great Depression failed, Hoover
tried legislation. These actions were generally
considered to be too little, too late.
• The Reconstruction Finance
Corporation gave government credit to
large institutions like industries, railroads,
and insurance companies. It also lent
money to banks so that they could extend
loans.
• The Home Loan Bank Act was designed
to help people save their homes and farms
by discounting mortgages rates.
Hoover’s unpopularity grows
• Many Americans blamed Hoover for their
problems.
• As the 1932 election approached his
approval rating went down.
• Hoover believed that the government
should not give direct relief to Americans
because it would make them lazy and
unwilling to work.
The Bonus Army
• A group of 20,000 WWI veterans and their families marched to
Washington to request their military service bonus early
• President Hoover ordered General Douglas MacArthur to clear
Pennsylvania Avenue.
• MacArthur did so using tanks and tear gas. Many people were
injured.
• This was the final nail in Hoover’s coffin. He would not be reelected
in 1932.
1932 Election
• Franklin D. Roosevelt, Democrat, ran against Herbert
Hoover, Republican
• Franklin Roosevelt promised the American people a New
Deal of relief, recovery, and reform.
• Voters saw hope in FDR’s plan and had lost faith in
Hoover.
• Franklin D. Roosevelt won the 1932 presidential election.
Dorothea Lange
Took pictures of the reality of the Great
Depression
Migrant Mother;
Nipomo, California
1936
Ditched, Stalled, and
Stranded
San Joaquin Valley,
California
1935
Hoe Culture,
near Anniston, Alabama
1936
Walter Evans
Also took pictures of the reality of the Great
Depression
Allie Mae Burroughs,
wife of cotton
sharecropper. Hale
County, Alabama.
CREATED/PUBLISHED
: [1935 or 1936]
Lucille Burroughs
picking cotton, Hale
County, Alabama
Squeakie asleep (Othel Lee
Burroughs). Son of a Hale
County, Alabama cotton
sharecropper.
The Dust Bowl
• A period of extreme drought plagued the
Great Plains for about seven years
• Cause by: lack of rain, high winds, and
over-cultivation of the land
Dust Bowl Photos
Minorities during the Great Depression
• Last hired, first fired (lost jobs to whites)
• Experienced worsening conditions
• Discrimination in jobs and relief programs
The problems of the Great Depression affected virtually every group of
Americans. No group was harder hit than African Americans, however.
By 1932, approximately half of black Americans were out of work. In
some Northern cities, whites called for blacks to be fired from any jobs
as long as there were whites out of work. Racial violence again became
more common, especially in the South. Lynchings, which had declined
to eight in 1932, surged to 28 in 1933.
People were distraught by their financial state
during the Great Depression. Many people
suffered physical ailments because of poor diet
and mental ailments because of anxiety.
Bud Fields and his family.
Alabama. 1935 or 1936.
Photographer: Walker Evans.
-
Those hurt the most were more stunned
than angry. Many sank into despair and
shame after they could not find jobs. The
suicide rates increased from 14 to 17 per
100,000.
Could you stay mentally and physically healthy under these
conditions? If you got sick, could you afford a doctor or
medicine?
18th amendment repealed with 21st amendment
• Roosevelt was opposed to prohibition. The federal government
needed the tax revenue from the sale of alcoholic beverages during
the Depression. Additionally, Roosevelt and the Democratic Party
wanted to build relationships with immigrant communities, and this
portion of the electorate leaned heavily against Prohibition. Shortly
after his first 100 days in office, President Roosevelt sent a bill to
Congress that would repeal Prohibition